Borders says its future is online

KAI RYSSDAL: It's time to talk Borders. Not the international kind, the book kind. Borders books has been struggling against Barnes and Noble, not to mention Amazon.com and even Costco. Today, the company announced a new direction, including a shift back to doing business online. Marketplace's Alisa Roth has more now from New York.

ALISA ROTH: Shortly after the dot com bust, Borders decided to get out of the online business. It partnered with competitor Amazon, which pays Borders a commission to operate its website.

More than five years later, Borders wants back in. And starting next year, the country's second-biggest bookseller will operate its own site.

Michael Norris is an analyst at Simba Information. He says the Internet has changed the way the entire industry works.

MICHAEL NORRIS: The Internet's the best thing and the worst thing to ever happen to the publishing industry. Books are discovered online, authors market themselves online. With all of that in mind, it's just natural for consumers to gravitate towards buying their books, you know, from an online source.

Almost 20 percent of books are already bought online.

But Vikram Sehgal of Jupiter Research says having a presence there gets you more than just customers who buy online.

VIKRAM SEHGAL: So a big component of the online channel is the impact that it has on your offline retail stores, because a lot of people will research online and actually end up buying offline. So it's important for somebody like Borders to have a strong presence in both channels.

But rejoining the digital age isn't the only trick in Borders's book. It's also closing down its overseas locations, even though it had been the only U.S. bookseller operating abroad.

And finally, taking a page from competitor Barnes and Noble, Borders will expand its own publishing business.